Washington's LEOFF 1 and 2 pension systems should remain separate
The Seattle Times Editorial Board opposes the proposal to merge the two police and fire pension plans, LEOFF 1 and LEOFF 2.
Seattle Times Editorial
THIS page has endorsed several reforms in state pension plans. One we do not endorse is the merger of the police and fire pensions, LEOFF 1 and LEOFF 2. The bills to do this, HB 2350, by Rep. Pat Sullivan, D-Covington, and SB 6563, by Sen. Lisa Brown, D-Spokane, should be defeated.
Police and fire pensions set retirement early because of the sort of work their members do. LEOFF 1, created in 1969, set retirement at 50. That was too expensive, and for employees hired after 1977, the Legislature created LEOFF 2, which sets retirement at 53. The older plan pays for medical expenses and the newer one does not. The older one is indexed for inflation; the newer one for inflation up to 3 percent.
The older plan has $1.2 billion more than it will probably need — money that would eventually go back to state and local government, which is where any surplus should go. The two bills would instead allow this money to fund benefits for LEOFF 2 members.
That may be illegal. Former Washington Supreme Court Justice Philip Talmadge thinks so. If it is not illegal, it is unnecessary.
Why do it? LEOFF 2 members have always wanted the richer benefits of LEOFF 1. The bills do not grant any more benefits. But the bills give the merged board of trustees effective power to set the contributions for LEOFF 2 participants, allowing it to create larger surpluses in the fund. And that would give LEOFF 2 members a stronger position from which to lobby the Legislature for higher benefits.
Compared with any group other than their older colleagues, LEOFF 2 members have generous benefits already. Their benefits do not need to be increased. Nor do police and fire pensions need the power to bypass the Legislature in setting contribution levels. No other funds have that power. Nor is there a financial need to merge the plans. Each is actuarially sound.
Why is this being considered? Only because the bills would allow the state to skip a $74 million payment into LEOFF 2, which helps the Senate Democrats' budget pencil out.
None of these is a good reason to mess with police and fire pension plans.